If adjusting entries are NOT prepared,which financial statements are misstated?

Question

Quizplus · Accepted Answer

Adjusting entries are necessary to accurately record revenue and expenses in the appropriate accounting period, and to properly allocate expenses to the periods in which they were incurred. If adjusting entries are not prepared, then all financial statements will be misstated because they will not represent the correct financial position or results of operations of the company. This includes the income statement, balance sheet, and statement of retained earnings.

If Adjusting Entries Are NOT Prepared,which Financial Statements Are Misstated